“Companies from countries
with stock exchanges that have implemented significant sustainability initiatives do better when
rated on their ESG (environmental, social, and corporate governance) performance,” EIRIS found. In
particular, “there was a markedly strong performance from both South African and Brazilian
companies.” In 2010, the Johannesburg Stock Exchange (JSE) began requiring its more than 450
companies to produce integrated reports in which financial and ESG information are combined in a
single document. And last year, BM&FBOVESPA, the Brazilian Stock Exchange, adopted a
report-or-explain position to encourage sustainability reporting by its listed companies.

EIRIS is especially well-positioned
for such an analysis of sustainability initiatives by emerging market stock exchanges, as it has
assisted both the South African and Brazilian exchanges in the establishment of sustainable stock
indexes. In 2012, EIRIS found that sustainable stock indexes in Brazil and South Africa “have
leapfrogged their developed-world peers by creating advanced ESG listing requirements,
sustainability indices and other products to drive disclosure.”

In 2011, Mexico's stock
exchange (BMV), the second-largest exchange in Latin America, launched a sustainability index, the
methodology and assessment framework is provided by EIRIS and the research firm's Mexican partner,
Ecovalores.

Describing the collaboration with BMV as "part of our wider work with stock
exchanges around the world," Peter Webster, Executive Director of EIRIS, said at the time, "Stock
exchanges around the world—particularly those in emerging markets—are embracing the view that they
have a key role to play in promoting sustainability and greater disclosure by their listed
companies."

EIRIS recently announced yet another collaboration with an emerging market
stock exchange. Borsa Istanbul, the Turkish stock exchange, has chosen EIRIS “as its partner to
develop the BIST Sustainability Index, which will be launched in early 2014,” EIRIS reported.

“We believe that the index will bring competitive
advantage to Borsa İstanbul listed companies,” Mustafa Kemal Yılmaz, Executive Vice
President of Borsa İstanbul, stated. “They will use the Index as a performance benchmark to
improve their social, environmental and governance performances and to adopt new targets.”

“Investors on the other hand, will have a new instrument to develop new investment products and
a showcase to select and invest in the companies with better sustainability performances,” he
continued.

“Emerging markets have a vital role to play in developing a global sustainable
economy,” Webster of EIRIS said. “Sustainable stock exchange initiatives, such as the Borsa
Istanbul’s Sustainability Index initiative, are crucial in driving more sustainable corporate
performance globally and at the local level.”

With allocations to investments in emerging
markets growing rapidly, investor confidence becomes an increasingly important consideration. Yet
according to a 2012
analysis by EIRIS, 78% of investors cite concerns over ESG performance by companies in emerging
markets as a potential impediment to investment, despite a growing integration of such markets into
the global economy.

Investors surveyed by EIRIS for the report identified stock exchanges
“as being fundamental to driving forward ESG disclosure in emerging markets through the development
and promotion of innovative products such as sustainability indices and listing rules that
encourage reporting on ESG criteria.”

“A number of emerging market stock exchanges have
leap-frogged their developed world peers in developing sustainability/green or socially responsible
indices and financial products in the last five years,” EIRIS found.